CDW Corporation to raise $641.7 million through IPO
The company and existing holders are offering 27.9 million shares at $20 to $23 each
New York: CDW Corporation, the technology supply company owned by Madison Dearborn Partners and Providence Equity Partners Inc., on Friday filed to raise as much as $641.7 million in a US initial public offering.
The company and existing holders are offering 27.9 million shares at $20 to $23 each, according to a regulatory filing. Vernon Hills-based CDW plans to list on the Nasdaq Stock Market under the symbol CDW.
CDW is pursuing the IPO almost six years after its purchase in October 2007, toward the end of the biggest buyout boom on record. A surge in US stocks this year has allowed private- equity firms to fetch more attractive prices for companies they acquired before the financial crisis. Now, investors concerned the US government may taper stimulus spending and damp the stock market’s climb may cool toward such offerings, said Jeffrey Sica, of Sica Wealth Management.
“Sentiment is there and confidence has maintained itself to a point, but it’s all centered around Fed policy,” said Sica, who oversees about $1 billion as the Morristown, New Jersey-based firm’s chief investment officer. Private-equity firms “feel they have a very limited window, and they know they have to get these things out now.”
At the midpoint of the price range, CDW would be valued at about $6.93 billion including debt, or 8.9 times adjusted earnings before interest, taxes, depreciation and amortization of $778.8 million in the 12 months through March 31, data compiled by Bloomberg show.
That compares with the median multiple of about 5.7 times for computer resellers EPlus Inc., Insight Enterprises Inc. and PC Connection Inc., which CDW names as competitors in its filing.
CDW plans to sell 23.25 million of the shares in the offering, while other owners will sell 4.65 million, filings show. Madison Dearborn’s ownership of CDW will fall to 38 per cent from 46 per cent, while Providence will pare its stake to 34 per cent from 41 per cent.
The company’s market value at the midpoint would be about $3.6 billion, with the existing owners’ portion worth about $3.1 billion, the data show. That represents a 45 per cent gain over their original $2.15 billion investment, according to CDW’s filings and data compiled by Bloomberg.
CDW generated more than $10 billion in revenue last year, providing software and hardware to corporate and government clients. Madison and Providence’s 2007 takeover of CDW valued the company at $7.28 billion, or about 13 times adjusted Ebitda of $581.9 million for the 12 months through December 31, 2007, filings show. The earnings figures are adjusted to exclude stock-based compensation and costs related to acquisitions and debt extinguishment.
CDW, which also provides cloud-computing, security and mobility services to more than 250,000 customers, joins HD Supply Holdings Inc. in proceeding with an IPO this month. The Atlanta-based construction-supply company owned by Carlyle Group, Bain Capital and Clayton Dubilier & Rice is seeking as much as $1.33 billion in a June 26 IPO, according to filings and data compiled by Bloomberg.
Through Thursday the Standard & Poor’s 500 Index has slipped 2 per cent since hitting a record on May 21, paring this year’s gain to about 15 per cent, data compiled by Bloomberg show. Federal Reserve Chairman Ben Bernanke has said the central bank may scale back bond buying if the US labor market “improves in a real and sustainable way.”
